M/S. TRANSOCEANIC FINANCIAL ENGINEERING PVT LTD ,MUMBAI vs. ITO WARD 13(3)(1), MUMBAI

ITA 6948/MUM/2025Status: DisposedITAT Bangalore01 October 2026AY 2011-126 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty order under appeal could not be sustained. The reasoning was that the transfer-pricing adjustment, which was the foundation for the impugned penalty, had been set aside by the Tribunal's earlier order dated January 28, 2019, for fresh adjudication. The Tribunal explicitly noted that its prior order had not expressed any opinion on the merits of the transfer-pricing issues. Therefore, the adjustment did not constitute a concluded determination and required reconsideration. The Tribunal also took note of the fact that in the second round, the Assessing Officer had passed a fresh assessment order and initiated fresh penalty proceedings. Consequently, the penalty order founded upon the earlier, now set-aside, transfer-pricing adjustment was quashed. The Tribunal clarified that it had not expressed any opinion on the merits of the fresh assessment or the validity of the fresh penalty proceedings, which were to be dealt with independently. The appeal filed by the assessee was allowed.

What were the facts?

The assessee, M/s. Transoceanic Financial Engineering Pvt. Ltd., filed an appeal against a penalty order dated October 15, 2025, passed by the National Faceless Appeal Centre, Delhi, under section 271(1)(c) of the Income-tax Act, 1961. The penalty of ₹18,17,200 was based on a transfer-pricing adjustment of ₹9,08,60,000 made in relation to international transactions with an associated enterprise. This adjustment comprised ₹5,60,00,000 for software and assets purchased and ₹3,48,60,000 for operating licenses. The assessee contended that the original transfer-pricing adjustment had been set aside by the Tribunal in a prior order (dated January 28, 2019), which directed fresh adjudication. The assessee further stated that in the second round, a fresh assessment order was passed, and new penalty proceedings were initiated, rendering the current penalty unsustainable.

What were the issues?

1. Whether the penalty levied under section 271(1)(c) of the Income-tax Act, 1961, can be sustained when the underlying transfer-pricing adjustment has been set aside by the Tribunal for fresh adjudication. Assessee's Contention: The learned counsel argued that since the transfer-pricing adjustment, which formed the basis of the penalty, was set aside by the Tribunal for fresh adjudication, the penalty could not be sustained. The assessee also highlighted that in the subsequent round, a fresh assessment order was passed and new penalty proceedings were initiated, further invalidating the current penalty. Revenue's Contention: The judgment does not record any specific arguments made by the revenue on this issue.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

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Income Tax Appellate Tribunal, ‘H’ BENCH

Before: SHRI AMIT SHUKLA & SHRI G.M. DOSS

For Appellant: Shri Prayag Jha, Advocate
For Respondent: Shri Pravin Salunkhe, SR DR
Hearing: 01/10/2026Pronounced: 01/10/2026

PER AMIT SHUKLA (J.M): This appeal by the assessee is directed against the order dated 15 October 2025 passed by the National Faceless Appeal Centre, Delhi, in relation to the penalty levied under section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 2011–12. 2. The penalty of ₹18,17,200 was levied with reference to the transfer-pricing adjustment of ₹9,08,60,000 made in respect of the assessee’s international transactions with its associated enterprise.

The adjustment comp

The order continues below.

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